Stating shield of noncommercial board activities, HC guards Gujarat cricket bodies and two more from income tax pay

Gandhinagar, November 02: The High Court in the state of Gujarat has upheld an exemption granted to the Gujarat Cricket Association and two other cricket bodies from income tax, saying that their activities, unlike those of the BCCI, are not commercial in nature.

 

A division bench of Gujarat High Court, Justices J B Pardiwala and A C Rao, last week upheld the Income Tax Appellate Tribunal's order justifying the exemption granted to GCA, Baroda Cricket Association and Saurashtra

Cricket Association, as they are registered as charitable trusts under the Societies Registration Act.

 

 

"It is not in dispute that the three Associations have not distributed any profits outside the organization. The profits, if any, are plowed back into the very activities of promotion and development of the sport of cricket and, therefore, the assessees cannot be termed to be carrying out commercial activities in the nature of trade, commerce or business," the order stated.

 

"It is not correct to say that their activities could be said to be the activities of the BCCI. Undoubtedly, the activities of the BCCI are commercial in nature," it added. The activities of the BCCI are in the form of exhibition of sports and earns profit out of it. "However, if the Associations host any international match once in a year or two at the behest of the BCCI, then the income of the Associations from the sale of tickets would not portray the character of commercial nature," ruled the court.

 

The state cricket associations had claimed that they are engaged in several non-commercial activities of promoting the sport as well as maintaining necessary infrastructure. The issue reached the high court in 2012 after the Income Tax Department canceled exemption registration of the three cricket bodies, which meant they became liable to pay tax. The department claimed the activities of these trusts were commercial in nature.

 

"BCCI also has commercial transactions like receipts of TV rights, IPL matches," the IT Department's order had stated. The cricket associations approached the Appellate Tribunal which set aside the order of the IT Department. The department then knocked on the doors of the high court which upheld the tribunal's decision.